Best practices for evaluating workforce composition

Posted by: Joel Capperella

We’ve seen plenty of suggestions on what to do with a firm’s full time or contingent employees, but not many on how to best evaluate the entire composition of the workforce.

Here are some ideas to help start a conversation around the complete workforce and improved talent inventory control.

• Segmentation: Provide adequate information to employees who are not members of your full-time staff. This includes detailing specific skill set requirements and standard use of every area of operations. It’s not enough to simply categorize these workers as full time or temporary employees. Rather, create categories such as professional contingent, administrative contingent, independent contractor, technical consultants, business consultants and deliverable associated (the talent necessary to complete projects or statements of work).

• Governing Policies: Define the criteria for acquiring non-employees. The policies and procedures put in place should not prohibit the business’ need to place talent quickly. Instead, they should manage all sources of talent, and connect them to very specific measurable performance expectations.

• Conversion of Deliverables to Skill Requirements: Evaluate all projects and statements of work to determine if they are being abused as an end to run around headcount. This is a frequent tactic used to connect the needed skill set against the deliverables that are understood as necessary for the current fiscal year (or any other short term objective). Typically, it’s possible to convert a small percentage of skills currently being used to complete projects or statements of work into standard skill requirements. By doing this, there is an opportunity to decrease the pay rate for this labor, and thereby the overall cost of having it as part of the workforce.

• Audit Independent Contractors: Identify company-wide use of employees classified as independent contractors. It’s not unusual to discover that approximately 25 percent of independent contractor use violates state compliance regulations. And, in an economy where state revenues are shrinking, greater scrutiny by the states should be expected. Prepare your company by performing your own independent contractor audit.

• Analysis of Buying Autonomy: Segmentation of the workforce enables a more discrete analysis of how much buying autonomy exists across varying lines of business and tactical areas of operation. Look to uncover unnecessary premiums being paid for talent, and uncover potentially inefficient or non-existent cost performance processes.

• Examine the Supply Chain: Review and analyze every supplier and determine how they are performing. Identify the cost impact their services, if unmanaged, have on overall labor expenses. Completing these examinations frequently will uncover an inability to identify every participating vendor in the supply chain.

• Uncover and Identify Rogue Spending: While this may appear to overlap with the examination of the supply chain and the analysis of buying autonomy, the objective here is to gain an intimate understanding of expenses currently “off the radar,” and subsequently, not measured for performance.